A blog on issues affecting Australia's newsagents, media and small business generally. More ...

Author: Mark Fletcher

This ABC story about Pearcedale Hardware is a must-read story for all small business retailers and every Australian who cares about or relies on small business retail

Pearcedale Hardware is closing today and the ABC has published a deep-dive into why:

The cost of doing business

Published

For many residents in the quiet township of Pearcedale, the local shops are the heart of the community.

On this weekday, the complex an hour’s drive south-east of Melbourne is beating strong.

Shoppers exchange cheerios across the car park and small talk about the impending rain as they bustle, car keys in hand, between the 13 shops.

…

The shop was their retirement plan. They hoped to rebrand it and work towards selling it, believing they could get a few hundred thousand dollars.

But they say things began to look shaky when their lease lapsed in 2019, and the owners wouldn’t sign a new agreement with them.

They were on a month-by-month arrangement, when in May this year their property agent emailed them a new leasing agreement.

“[I was in] disbelief. I couldn’t believe what they were asking,” Adrian says.

The landowners were tripling the rent — from $29,687 a year to $88,638 a year.

Be sure to read the whole story.

There are many good landlords out there who go above and beyond for their small business tenants. There are also plenty of landlords who suck.

This story is a reminder that we small business retailers sign our leases, accepting the terms and conditions, accepting the risk.

When a lease goes to month-to-month, that’s what it is. We need to manage our business with that expectation and do our own planning, rather than relying on a decision from the landlord.

I appreciate it can be difficult and challenging. But, it’s best we expect the worst and plan for it, to protect ourselves and our business as much as we can … because, too many landlords do suck.

Retail is fundamentally changing in ways we can see and, more importantly, in ways we cannot see. We have to be as far ahead of that curve of change as we can be. This means disrupting your own businesses.  Running a shop with one prime source of income (the shop) is an out of date model. we seen to diversify as to what people buy, how they buy and the locations they buy from in the retail world today. This approach spreads the risk.

Back in the day, opening the front door of your local shop was the key marketing activity. Not now. Not for many years.

I have been in the situation of the folks at Pearcedale Hardware, facing a massive rent hike. I said no thanks. I am lucky to have a diverse business such that closing one shop would not hurt too much. But … I evolved the business to be that, to not rely  on one location.

I appreciate many local small business retailers don’t feel they can do that due to capital, local situation or other factors. But, there are ways to insulate your business from the impact of a massive rent hike. The time to seek those ways out is long before you need to … and that is the core point I’d make today.

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Ethics

If you have a moment to do some good …

If you have time and are able, I’d appreciate you helping a remote community in Aurukun, Queensland. Janelle from Cape York Partnership reached out earlier this week asking for old magazines. here is her note:

Good afternoon My name is Janelle and I work in a very remote community called Aurukun where most of the community is on Centrelink and struggle to live day to day as food is very expensive here. It is a community that has many barriers and issues that impact on all the community people I work in CDP which requires anyone on Centrelink to come in and see us, at times this is very busy and means sitting and waiting for extended periods of time. I am approaching you to see if there is any chance of being given some of the old magazines ie That’s Life, Take 5, Australian Geographic, Football, Hunting anything like that. Also any old basic Crossword/Find a work type magazines as well, kids too. It doesn’t matter to them if they are months old it will just give them something to look at while they sit and wait and then we could pass these onto the Aged Care Centre for the patients there. I hope that this is possible and wait to hear back, much appreciated Janelle

I spoke to Janelle and discovered they could use plenty more than old magazines. They can use pencils, colouring books, kids toys and gifts, too.

Rather than send returns, we sent a bundle of current issue magazines from each of my shops and 30 Beanie Boos and some colouring sets. I mention this as an example of what any newsagent could do if they would like to help this organisation.

I appreciate we all get calls daily for help from local and other groups.

This message from Janelle resonated.

If you can help, I am sure the Aurukun community would appreciate it. Here iOS the address for sending any donations:

Janelle Ainsley
C/- CYE
508 Kang Kang Road
Aurukun 4892
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Social responsibility

News Corp half price magazine offer exclusive to Woolworths

I was told about this offer just as it ended, a half price offer for News Corp. magazine titles at Woolworths supermarkets. Newsagents should think of this next time a News Corp. representative claims newsagents are important to them. I can’t recall an offer like this from News Corp. to encourage shopping in newsagencies.

If News Corp. values newsagents, it needs to do better.

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magazines

Thank you gifts selling well this Christmas

We are seeing growth on thank you cards and gifts this Christmas. It’s a valuable segment of Christmas related purchases with these thank you shoppers often buying for several people at once. Having the easy gift and a card helps win the business. We target this shopper on socials as well as in-store with tactical placement.

Covid is certainly the key factor in growth in this segment this year. You hear it in conversations with customers.

While other Christmas gift segments such as Kris Kringle and teacher are strong, it’s the thank you gift segment that is stronger this year.

What I especially like about thank you gifts is that the gift price can vary more than in other segments, wallowing a broader pitch to this shopper.

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Gifts

What frustrates newsagents about magazine subscription only deals

Newsagents have offered magazine putaways for decades, a consistent and loved service for shoppers loyal to specific mastheads. The putaway service of newsagents has been vital to magazines, yet it is something magazine publishers have failed to embrace. Instead, they trope money at subscription offers designed to lure people from over the counter purchase, offers like these that are being pitched right now:

I have talked about these types of offers with magazine publishers many times over the years. They have their reasons for making the pitches as well as their reasons why similar offered in newsagencies for cutaway customers are not something they support.

I think magazine publishers need to reassess the value they place in the newsagency channel. A tip-on gift for an issue of a title exclusive to the channel is not sufficiently differentiating.

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magazine subscriptions

Is there a quality problem with products made in China at the moment?

Maybe it’s just me but it feels as if the quality of some products coming out of China at the moment is less than it was a couple of years. I say this based on the number of credits sought when checking new products coming it.

Of particular concern is seasonal products for which there is no replacement stock, leaving a hole to be filled. For example, licenced Christmas ornaments that look dirty or damaged and that will certainly not sell.

This is a problem suppliers need to address. Usually, they have quality control agents working with factory in China, checking products as they come off the production line. For some suppliers, it’s as if those quality control agents are not working as they were.

We have changed our product checking process to ensure we catch problematic product before it hits the shop floor or the online sales fulfilment desk. While you could argue every product should have been checked previously – with shrink wrapped product this can be time-consuming and not something a shopper wants if they are buying to collect and keep unopened for years.

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Newsagent suppliers

Updated advice for new newsagents

Six years ago I published advice for new newsagents covering a range of areas of newsagency management. Here is my revised advice for new newsagents:

There is plenty to learn for the new newsagent and plenty an old hand can forget. I am often asked about important day to day operational tasks in running a newsagency so I started putting together a list. It’s an evolving work in progress, something I am happy to share with anyone – not as a definitive list of what you need to be on top of in running your newsagency business but something at least you can check against.

But, before we get into the list, let’s consider the biggest challenge / opportunity. What type of newsagency do you want to run? A retail business or an agency. A retail business is value focussed – value from sales volume, product Martin and shopper visit efficiency. An agency is about making a clip from each transaction ‘owned’ by another party like newspapers, magazines, lotteries. A retail focussed business will be more valuable over the long term while the agency business can appear easier to run.

You drive business value by playing at the boundaries of the business, broadening what you sell, the price points you can achieve and the new faces you can attract. I think it is vital for new newsagents to invest time and capital in this – broadening the appeal, and value, of the business, as that is what will play best when it comes time to sell.

Now, to the updates list of every day work in a newsagency:

  1. MAGAZINES.
    1. Arrive invoices through XchangeIT – no other way.
    2. Only sell magazines by scanning. Never use department keys.
    3. Do not label all magazines. Do not label weeklies or high volume monthlies.
    4. When returning magazines, scan out returns. Do this at least weekly.
    5. Do not early return magazines the day they arrive unless you have been sent too many. Often newsagent who early return deny the opportunity of sales.
    6. Early return at least twice a month – based on what is NOT selling.
    7. If you have sub agents – only supply them through the sub agent facilities in your newsagency software.
    8. Check your magazine account as soon as it comes in to ensure you have received all credits.
    9. Pay your magazine bills on time without fail – avoid being cut off for weeks without magazines.
    10. You control where magazines are placed, it is your shop. Do not be told by publisher reps where magazines should go.
    11. You do not have to put posters in the window. I recommend against this.
    12. You do not have to do big magazine displays – it is your choice. I see no evidence of it increasing sales.
    13. I recommend against letting magazine companies set up display unless you think they will help drive sales.
  1. NEWSPAPERS.
    1. You control where newspapers are placed, it is your shop.
    2. If you are regularly undersupplied, complain to the publisher as well as the supplying newsagent (if you do not have a direct account).
    3. Scan all newspapers you sell.
    4. Scan all newspaper returns – accurate data will be your friend in the event of a dispute
    5. You do not have to put out newspaper posters or place newspapers in a certain position unless you have signed a contract with a publisher agreeing to this.
    6. Manage your exposure to promotions where you sell stock for a tiny margin.
  1. CARDS.
    1. Put out your own cards. Learn what you stock. Take ownership of this most important product category.
    2. Ideally, do your own card order. It’s your money being spent. Don’t leave this to someone else to do.
    3. Agree on an ordering process with your card co. account manager.
    4. Immediately report any over or under supply.
    5. Trust your data ahead of your gut and ahead of sell-in reports from suppliers.
    6. Pay on time or risk being cut off.
    7. Discount seasonal stock at the end of the season for a couple of days to pick up stragglers and make an extra few $$$.
  1. STAFF.
    1. Ensure everyone has a list of things to do each day.
    2. Have a documented position description against which your employees are measured.
    3. Have a written roster every week.
    4. Have a structured process for handling annual and sick leave.
    5. Use payroll software for record keeping.
    6. Pay always on time and preferably by electronic transfer.
    7. Pay super on time. Do not start someone working for you unless they have provided a super account number with their tax file number.
    8. Change your roster regularly for casuals.
  1. STOCK  AND SUPPLIERS.
    1. Only see supplier reps who have made an appointment.
    2. If a supplier rep tells you something will be a success, ask for the evidence.
    3. Use your computer system to guide ordering of stock – order based on sales.
    4. Order to a budget.
    5. Scan everything you sell.
    6. Scan out personal use stock.
    7. Set your own mark-up policy for items that are not pre priced.
    8. It is easier to discount than increase prices.
    9. Do not pay for an external stock taker – do it yourself through the year.
    10. Check high theft risk items like weekly or fortnightly.
    11. Arrive and price stock on the shop floor, and not the back room. You’ll sell more this way.
  1. SHOP LEASE.
    1. Pay on time otherwise you could be locked out.
    2. Do not agree to a new lease unless you have read the entire document and are prepared to agree to it in its entirety.
    3. Conduct discussions with your landlord in writing to maintain a paper trail.
  1. GST.
    1. Complete your BAS on time and make any necessary payment – to reduce the opportunity for you being audited.
  1. FINANCE AND OTHER MATTERS.
    1. If you borrowed to get into your business, start paying this off from the first week, make progress everyweek. This avoids you having a challenge when you come to sell the business.
    2. Pay yourself a wage or at least accrue this in the accounts.
    3. Integrate with accounting software like Xero – keep bookkeeper costs down.
    4. Ensure workcover (workers comp.) cover is up to date and maintained.
    5. Ensure you have appropriate council permits for what you sell – i.e. food.
    6. Have a structured banking process that ensures that cash is tracked at all steps and at all time.
    7. Take a data backup every day. The best approach is an automated cloud backup – ask your software company.
    8. Bank every day and bank the takings for each day separately to make reconciliation easier.
    9. Use your software to manage the end of shift process to drive consistency and accuracy.

As I said at the start, this list is evolving with time. I hope it is useful to new newsagents and would be newsagents, to understand some of the day to day tasks you cannot afford to get wrong.

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Newsagency challenges

The double standards of some suppliers

We have suppliers in our channel who steadfastly ‘territory protect’ denying nearby retailers from accessing their products while they themselves, the suppliers, run a direct to consumer website that could sell to anyone, anywhere.

I’m all for ending territory protection. We are in a free market after all. Likewise, I am all for competing with anyone online, too. I say this as there is one supplier that required physical retailers to not offer products online.

All these restrictions are a real turn off dealing with some suppliers.

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Newsagent suppliers

Video key to promoting this Christmas on social media

Video content on social media is referenced by the platforms more than ever before, because it’s what the platform users give more eyeballs to.

This type of content is disposable, used a couple of times for the season and not after.

Here are three videos from the Christmas suite developed for newsXpress member use. First: mum and dad:

Dad cards:

Mum cards:

Videos like this are not blockbusters. They are easily locally produced for the disposable use I outline above.

In my experience, they get better engagement than flat photos of a Christmas card stand.

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Greeting Cards

Newsagents not to blame for missing and late newspapers and magazines

In Victoria, New South Wales and Queensland in recent months newspaper and magazine distribution has become even more unpredictable than usual.

Too often, newspapers and magazines arrive late in newsagencies. Sometimes, they don’t arrive at all.

This is not the fault of the newsagent.

Talking to the newspaper and magazine companies you get the feeling they don’t see it as their fault, either. They point at those they contract with.

Newsagents find it almost impossible to get assistance that resolves the problem of late and completely missed newspaper and magazine deliveries.

The distress the situation is causing for affected newsagents is considerable.

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magazine distribution

VANA / NLNA cuts member fees to $0?

I’m told VANA / NLNA emailed newsagents last week promoting free membership for six months. I’m not sure if it is free for existing members or only new members.

In their pitch they say they provide members improved income, reduced costs and improved foot traffic. The marketing reads as a bit old school to me though, and out of touch.

Newsagents have access to very competitive insurance rates as well as easy access to HR support. They don’t need to be in NLNA to access these things.

As for an Amazon locker, that’s an agency offer that we know from overseas experience will do little for over the counter sales in a shop.

Like I said, it all feels a bit out of touch.

It’s on my mind because a new newsagent asked me about it. They felt that they could fail in their new business if they did not join. I explained that everything the NLNA business spruiks can be accessed elsewhere. I told them to save their money and that is belonging to a representative body was important to them, the better established and nationally representative ALNA is what I recommend.

People can join any group they want or feel is right for them. My only advice is do your homework, make sure it is a good fit for you.

Now, for disclosure, I own newsXpress. you could consider newsXpress a competitor of NLNA. I don’t see it that way as the suite of benefits and services available through newsXpress is very different.

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Newsagent representation

Chasing value in the newsagency

Value matters in any retail business, and and retailers have more control over value than they often think they have.

Today, I want to address value in retail in the context of product value.

The value of a product depends on the gross profit for that product, what you sell it for less what you paid for it. The real value of a product is the gross profit less the labour, and retail space costs for the product. The value of a product over a year is these things times the quantity of the product sold.

If you sell a gift for $250 with a GP% of 50%, you make $125.00. That’s the same as the GP you would make from around 380 newspapers, 85 magazines or 100 or so lottery tickets.

The challenge is to have the right higher price point items that sell at good volume to deliver more bankable margin dollars than you will make from lower margin legacy products.

This is where an engaged marketing group like my newsXpress helps its members grow profit, and through this cultivate greater value for their businesses, and from that flows enjoyment.

Can anyone sell items worth $250 or more? In my experience, yes!

But, value is about more than the ticket price of an item. Other factors include:

  • Buy price.
  • Stock turn.
  • Shrinkage.
  • Differentiation.

Too often, retailers focus only on the buy price, thinking that buying better is what matters. It’s only part of it. You can’t bank a percentage. You can only bank gross profit dollars. hence, the importance of turn.

So, buying at the right price is important as is the right product that will turn quickly, ideally, faster than items it replaces on the shop floor – thereby driving more value from that allocated space in your shop.

I see plenty of retailers restricting what they can achieve in their business by deciding what won’t work, without even trying it. I’ll try just abut anything and let my customers tell me if it works or not. Now, of course, there are some constraints on that approach – space, capital and relevance to the overall business. But, I will certainly try products outside what is immediately assumed to be relevant.

That approach of trying things, in pursuit of growing value, has revealed plenty of opportunities I’d not have considered under the more traditional paradigm of retail. business management.

This is one of the benefits of Covid, we have permission to be more experimental in what we sell, how we sell, when we sell and where we sell. Embracing those opportunities, in pursuit of driving business value, will land rewards.

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Newsagency management

Production issues with The Age upsetting home delivery customers

Here’s what one subscriber shares on Twitter yesterday:

It’s another newspaper home delivery fail that’s on the publisher.

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newspaper home delivery

Newsagents: check out Officeworks

With non-essential retail back open in Victoria I got out to Officeworks earlier this week to see what changes they had made given their proximity to a couple of my businesses.

It is fascinating the shift in focus in Officeworks. While stationery and office related products remain at their core, they have products that speak to other purchase reasons, and through which they can expand the appeal of their business.

Their gifting, for example, has expanded from what I can see, especially indigenous inspired gifting, which is on trend right now.

Their 2022 diary story is fresh and forward-leaning, quite unique actually – but expensive.

Their calendar range comprehensive.

If you have an Officeworks nearby, I urge you to check it out, so you understand what you are competing with, even if you don’t think of them as a competitor to a newsagency. They are, of course.

I think Officeworks has come out of lockdown with renewed focus in terms of range and in terms of the shop floor experience. Each staff member I interacted with was happy, keen to help and happy to be serving customers.

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Competition

Click and collect remains popular after lockdown lifted

Click and collect continues to be popular in Sydney and Melbourne businesses after lockdowns in each city has been lifted.

From what I can see it is stronger in these two locations than elsewhere in Australia. Maybe that has something to do with the two recent long lockdowns. I’m not sure.

I mention it today to remind retailers that having an easily accessible click and collect solution for ordering and pickup is critical even post lockdown as it looks like it will be here for some time.

Click and collect can open your business to shoppers you don’t usually see in-store.

It can also make it easier for people to shop with you while you are closed.

Click and collect makes it easier for family living elsewhere purchase for loved-ones near the shop.

And, it can offer you management options for staff in-store depending on the volumes you can achieve.

Now, thinking about newsagency businesses, what are shoppers purchasing through click and collect? This list is a sample, but certainly not everything: Cards. Gifts. Magazines.Newspapers. Stationery. Toys. This is based on what I have seen over the last month.

Right now, of course, there is a higher indexing of Christmas gifts in click and collect – because of the lack of trust in Australia Post and others to deliver on time.

My advice? Make sure you ave a click and collect option, make it easy for customers and for the business.

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Newsagency management

As retailers we have a trust obligation to our customers

There is a newsagent who has access to limited edition product sold to them on the basis that they place it in-store for customers to purchase but who, instead, places the product almost immediately in eBay, selling for two and three times the retail price.

I understand the appeal of making two or three times the gross profit, yes it really is that much. I do not understand the breach of supplier terms and the breach of trust with shoppers.

We will find out soon enough if their behaviour negatively impacts their own businesses or other newsagents who also purchase from the supplier. Yes, that is the risk here, that all newsagents are lumped together and judged based on the actions of one.

The value of limited edition product is the foot traffic it can attract and the joy of shoppers able to purchase it from you. This is more valuable long term than the repyutational damage that will come if you keep the product and sell it yourself for two or three times retail.

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Ethics

The scent of Christmas encourages Christmas purchases

For several weeks we have had a Christmas range of candles, soaps, scent sticks and more near the entrance to the shop, places so as to tease but not overwhelm.

It is terrific hearing customers comment. It’s always positive, and often leads to a purchase either of one off the scented products or other Christmas products nearby.

It’s an easy move placing gently scented products near the entrance and near other Christmas products.

In areas recently out of Covid lockdown, shoppers are keen for the Christmas experience. There is a curiosity about what has changed in retail. They are looking for a difference. It’s an opportunity for us to try things out and this is why I suggest to retailers who have not engaged with scents in their stores to consider doing so this Christmas.

We are loving the shopper reactions, and their purchases.

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retail

The Great Resignation could be a thing, something we need to consider

The Great Resignation is more than a glib phrase, it reflects a movement unfolding and being discussed worldwide in businesses, governments and elsewhere.

It’s a Covid thing in that people have had the work from home experience of flexible hours, no commute, enjoying the local community more and a closer family embrace.

A Great Resignation trigger is when a business asks / demands employees return to the office. It gives plenty, apparently, pause for thought about other employment options.

If this plays out as some think it could, local businesses that have benefited from more people working locally could continue to flourish as businesses call people back in.

Here’s a scene-setting story from CNBC:

Here is a news.com.au story:

Click here to access an ABC story about this from a few days ago.

I don’t know if The Great Resignation will be a big thing here in Australia or not. But I do think it is interesting to read about and consider how it could play out in the context of our local businesses. I kind of think it could be welcome disruption.

Now, thinking about this in the context of the newsagency software company I own. Mid last year we made it clear that we would not be requiring people to return of the office. Indeed, we have hired several new team members located interstate because they were perfect candidates and they wanted to work from home. These personal experiences make me think The Great resignation may not be great. It may be a thing, but not great … because workplaces will be flexible, especially small business workplaces if they can.

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Social responsibility

Covid rapid antigen tests banned in Western Australia

With newsagency stationery supplier GNS providing access to an approved Covid rapid antigen test product for sale in newsagencies, it’s no surprise there is strong interest from newsagents. But, there has been surprise, from myself included, in news that the use of rapid antigen tests is banned in Western Australia by direction of their Chief Health Officer.

I mention it here following contact today from several newsagents in Western Australia.

1 likes
Social responsibility

Great to see another local, independent, regional newspaper: Eyre Peninsula Advocate

Check out the terrific story about the launch of the Eyre Peninsular Advocate, a new local and independent newspaper to rise in the wake of a corporate rural newspaper closure.

COMMUNITY
Another SA regional newspaper is reborn

James Manuel

1 min read

The new weekly Eyre Peninsula Advocate hit the newsstands last week, heralding the return of print news to eastern and western Eyre Peninsula.

Papers and Publications Managing Director Andrew Manuel said the reception from communities from Cleve to Ceduna had been amazing.

“Regional newspapers are so important to people living in the country,” Andrew said.

“When local newspapers close, it hits communities hard.

“Newspapers keep people connected to their communities and each other through sharing the stories that locals care about.

Check out the online version of the Eyre Peninsular Advocate too. Their subscriptions options are modest:

Just as our parliament, and democracy, would benefit from more genuinely independent representation, so do local communities benefit from more independent media outlets. I hope we see more indie papers start up, and thrive.

8 likes
Media disruption

How newsXpress uses data to help make newsagencies more successful, enjoyable and valuable

newsXpress provides its members a range of educational and motivational material. Here is a recent example, a video in which we explore extraordinary Halloween sales success in a business not known for Halloween.

Note: this video is not about Halloween. Rather, it is about how thoughtful, fact-driven decisions can add thousands on gross profit.

What makes the success more valuable is the bonus margin exclusive to newsXpress members.

Here is the video I and a colleague made over a week ago for newsXpress members about this.

In sharing this I am sharing information anyone could use. Yes, there is a risk to this. However, it is tiresome seeing marketing emails to newsagents promising the world but offering no facts, no evidence, no actionable items they can trial.

What is outlined in the video can work for Christmas and at other times of the year.

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Newsagency management

Banks really don’t want over the counter business

I went to the bank at 11am Monday for an over the counter transaction onto to discover that they were closed Monday and Tuesday. I went at 11am because they had started closing at 1pm. Now, it seems, closing Mondays and Tuesdays is a thing.

The only reason I go to this brand is because our local branch closed as did the next branch we went to.

Anyway, I got there yesterday, waited in line for 30 minutes only to be told that type of transaction needs to be done in the city. It’s not a complex transaction, but it does require a branch authorisation,  which they, apparently, can no longer do.

…

At one of my shops, we deposit cash every few days using the cash deposit ATM – when the machine is working. Currently, because we have been keeping records – the ATM has a downtime of more than 50%. When we approach people in they branch they say it’s nothing to do with us.

…

These are my recent local branch banking experiences. I have heard of worse from plenty of others in local small business retail.

The local bank branch network in Australia was unique, a point of difference for our country. I think it’s now lost forever.

13 likes
Social responsibility
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